STANDARD LIFE IS bracing itself for a second round of takeover approaches after it emerged that Resolution - one of the companies already knocked back by the Edinburgh assurer - is considering a return to the table with a fresh offer, reports The Scotsman .
According to the paper, the mutual said on Tuesday it had received a string of offers in recent weeks - a development described by chief executive Sandy Crombie as "inevitable" as the firm nears the end of its two-year demutualisation programme.
Crombie said most of the approaches were for "significant stakes" in the group, although Resolution is understood to have proposed an all-share merger. Standard rejected the Resolution approach, but The Scotsman has learned the spurned suitor is awaiting the opportunity to strike again. "The industrial logic is there," said an industry source, "and it will still be there in the future."
A new proposal is unlikely before the Edinburgh group floats on the stock market in July - a move set to value it at £4.8-5.5bn, while French giant AXA - widely tipped by analysts as a potential buyer of Standard Life - is also believed to have indicated an interest in acquiring a stake in the group.
But one observer cast doubt on the seriousness of the merger proposal, saying the two firms had "significantly different strategies". Resolution has become the market leader in the running of closed funds, while Standard's £31bn with-profits fund remains open to new business.
However, analysts said the deal made more sense than at first it appeared, with Farooq Hanif, of Credit Suisse, quoted as saying: "It would be a departure, but I think everything Resolution will do from now on will be a departure. It has bought distressed assets in the past, but in the future its chosen deals are likely to be pretty big - and less frequent."
The company is believed to favour closing Standard's with-profits fund to new business - against the firm's demutualisation plans, but it is less clear what Resolution would do with Standard's non-with-profits business, although a queue of potential buyers is likely to have formed if the deal had gone through.
THE MYSTERY OVER THE extent to which the Government has promised to underwrite some pension schemes has deepened after the disclosure that up to 20 funds may have received Crown guarantees, reports The Daily Telegraph.
Following a report by the paper that more than half of BT's pension deficit is protected by the taxpayer, it emerged yesterday other companies' schemes have received similar promises.
The Pension Protection Fund (PPF), which pays compensation when retirement schemes go bust, said it was looking into about 20 such guarantees, though the group declined to name names. Pension experts said although not all 20 would be company schemes, they understood several funds of former state-owned enterprises were involved.
BT's guarantee was approved in 1984 when the telecoms group was privatised but the underwriting arrangement was never revealed in the flotation prospectus or in any subsequent annual report.
There was confusion after the Department of Trade and Industry said it was only aware of BT's Crown guarantee. "We are looking into this but a lot of these guarantees date back many years and some of the pension schemes have changed their terms," a spokeswoman said.
Since the BT guarantee was revealed, privatised companies have been dusting down their flotation details. Centrica, the former British Gas, British Airways and Qinetiq said they have no guarantee.
Corus, which emerged from British Steel, said it was still looking at paperwork, and while the rail industry is covered by several pension schemes, Network Rail said its own fund had no taxpayer protection.
A pensions adviser said as well as company schemes, others included among the 20 funds mentioned by the PPF would be the Civil Service Pension Scheme and schemes linked to the former British Coal Board.
A TIGHT SQUEEZE ON Britain’s public spending will be needed from 2008 if Gordon Brown is to meet his rule to limit the national debt to a maximum of 40% of GDP, the IMF said yesterday, reports The Times.
The warning to the Chancellor over the challenges that he faces during the period in which he hopes to become prime minister came as the IMF also delivered an unexpected endorsement of Brown’s economic forecasts for this year and next.
Upgrading its projections for Britain’s economic performance, the Fund said it expected the UK to enjoy growth this year of 2.5%, at the top end of the Chancellor’s own prediction of 2 to 2.5% and up from the IMF’s estimate last autumn of 2.2%.
For 2007, the IMF shaved its UK forecast back to 2.7% growth, from the 2.8% it predicted last autumn. This was broadly in line with Brown’s expectation for GDP to rise by 2.75% next year.
But the IMF challenged the Treasury’s insistence that it will continue to meet its “sustainable investment rule”, which sets a 40% of GDP ceiling on national debt. The Fund expects net debt to reach 39.4% this year and to rise to 40.4% next year.
The Fund said, although existing restraint on spending and last December’s tax raid on oil companies in the Pre- Budget Report had helped prospects, more action would be needed. In future, sticking to the rule would depend on “specifying concrete measures to contain spending after 2008”.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
Feasibility study due
'Let’s be bold enough to demand change'
Joint life second death option added to relieve tax burden on couples gifting assets
Backed by Schroders, LGIM and the IA
New system for funds without without three-year track record